Question 1

Indicate which courts decided the case cited below. Also indicate on which pages and in which publications the is reported.
U.S. v. Maclin P. Davis, 397 U.S. 301, 25 AFTR 2d 70- 827, 70- 1 USTC & 9289 (1970).

Accepted Answer

The answer of Indicate which courts decided the case cited...

Question 2

On August 1 of this year, Sharon, a cash- method taxpayer, signs a lease for office space and begins business. The lease is for 3 years. At the time the lease is signed, Sharon pays the $12,600 rent for the entire 36- month lease term. How much can Sharon deduct this year?

Accepted Answer

A)  $5,950 
B)  $350 
C)  $12,600 
D)  $1,750

Question 3

Husband and wife, who live in a common law state, are eligible to file a joint return for 2018, but elect to file separately. Wife has adjusted gross income of $25,000 and has $2,200 of expenditures which qualify as itemized deductions. Husband deducts itemized deductions of $14,200. What is the taxable income for the wife?

Accepted Answer

A)  $25,000 
B)  $22,800 
C)  $13,000 
D)  None of the above.

Question 4

A credit is available to encourage employers to provide child care for employees. The employer can either operate its own child care facility for its employees or pay a separate qualified child care facility under contract.

Accepted Answer

A) True 
 B)False

Question 5

American Healthcare (AH), an insurance company, is trying to persuade Congress to enact nationwide anti- smoking legislation. As part of this effort, AH paid $500,000 to hire a lobbying firm to discuss its concerns with members of Congress. AH also contributed $100,000 to candidates for political office who support limiting public smoking. What amount of these expenditures can AH deduct?

Accepted Answer

A)  $600,000 
B)  $500,000 
C)  $0 
D)  $100,000

Question 6

Natasha, age 58, purchases an annuity for $40,000. Natasha will receive $400 per month for the rest of her life. The expected return multiple is 20.0. At age 65, the amount that Natasha may exclude from income is

Accepted Answer

A)  $0. 
B)  $2,800. 
C)  $4,000. 
D)  $2,000.

Question 7

If personal- use property is converted to trade or business use, the basis for depreciation is the lesser of adjusted basis or FMV on the date of conversion.

Accepted Answer

A) True 
 B)False

Question 8

Taxpayers have the choice of claiming either deductions for AGI or the standard deduction.

Accepted Answer

A) True 
 B)False

Question 9

Michael is an employee of StayHere Hotels, Inc. in Washington, DC. On his vacation, Michael travels to San Francisco and stays at a StayHere Hotel for six nights free of charge. The regular rate for a hotel room at StayHere in San Francisco is $300 a night. His ability to stay in the hotel without charge is based on the availability of empty rooms. How much income must Michael report due to the use of the San Francisco hotel room?

Accepted Answer

A)  $360 
B)  $1,800 
C)  $300 
D)  $0

Question 10

A shareholder sells his S corporation stock and realizes a $500,000 gain. The stock had been held five years. Which of the following statements most completely describes the character of the gain?

Accepted Answer

A)  A long- term capital gain taxed at the 15%/20% capital gains rate. If the corporation owns collectibles, gain attributable to those assets will be taxed at the 28% long- term capital gain rate. 
B)  Ordinary income to the extent of the shareholder's share of the business's unrealized receivables and appreciation on inventory, with the balance taxed at the 15%/20% capital gain rate. 
C)  The portion of the gain attributable to unrecaptured Sec. 1250 gain taxed at 25%, with the balance taxed at the 15%/20% capital gain rate. 
D)  Both B and C apply to the gain from the sale of S corporation stock.

Question 11

Teri pays the following interest expenses during the year:  What is the amount of interest expense that can be deducted as an itemized deduction?

Accepted Answer

A)  $14,300 
B)  $14,700 
C)  $10,500 
D)  $10,900

Question 12

Marisa has a 75% interest in the MM Partnership. She sells the partnership a building used in her business for
$150,000. Her adjusted basis of the building was $120,000. Marisa had used straight- line depreciation. The partnership will use the building for its offices. What are the tax consequences to Marisa of this transaction?

Accepted Answer

The answer of Marisa has a 75% interest in the...

Question 13

On July 1, Alexandra contributes business equipment (which she had purchased two years ago) having a $45,000 FMV and a $40,000 adjusted basis to the AX Partnership in exchange for a 25% interest in the capital and profits. The basis of Alexandra's partnership interest is

Accepted Answer

A)  $40,000. 
B)  $5,000. 
C)  $45,000. 
D)  None of the above.

Question 14

May an individual deduct a charitable contribution for services rendered to a charitable organization?

Accepted Answer

The answer of May an individual deduct a charitable contribution...

Question 15

Expenditures which do not add to the value or prolong the life of property may be expensed in the year in which they are incurred.

Accepted Answer

A) True 
 B)False

Question 16

Ivan Trent, age five, receive $2,900 of dividends per year from a mutual fund he owns; it is his only source of taxable income. Ivan's parents plan to gift a corporate bond they currently own to him. The bond pays $4,100 of interest income per year. Ivan's parents are in the 37% tax bracket. The individual income tax rate schedule that generally applies to a single taxpayer indicates a 10% tax rate until taxable income of $9,525. Ivan's family will save tax at the rate of 27% (37% - 10% tax rates) on the bond interest income if the parents transfer the bond to Ivan.

Accepted Answer

A) True 
 B)False

Question 17

Jorge contributes $35,000 to his church and 100 shares of XYZ stock to the American Red Cross. The shares were purchased three years ago for $10,000 but were worth $18,000 as of the donation date. Jorge's AGI this year is
$100,000. Assuming no elections are made, determine his current year charitable contribution deduction and the amount of any carryover to next year?

Accepted Answer

The answer of Jorge contributes $35,000 to his church and...

Question 18

Summer Corporation has the following capital gains and losses during the current year:  The tax result to the corporation is

Accepted Answer

A)  $10,000 NLTCG is included in gross income and $4,000 NSTCL is carried forward to the next year. 
B)  $10,000 NLTCG receives long- term capital gain treatment and $4,000 NSTCL included as ordinary loss. 
C)  $6,000 NSTCG included in gross income. 
D)  $6,000 NLTCG included in gross income.

Question 19

The holding period of like- kind property received in a nontaxable exchange begins on the day of the exchange.

Accepted Answer

A) True 
 B)False

Question 20

Ella needs to move her business to a larger facility. She projects a large realized gain on the sale of the old building and prefers not to pay tax on the gain because the sales proceeds are needed to finance the purchase of the new building. In the circumstances, a direct two- or three- party like- kind exchange is not feasible. Ella's sale can still qualify for like- kind treatment if she arranges an appropriate nonsimultaneous exchange. Among other criteria, after the transfer of the old building, the replacement property must be

Accepted Answer

A)  identified within 60 days and received within 180 days. 
B)  identified within 45 days and received within 180 days. 
C)  identified within 90 days and received by year- end. 
D)  identified within 45 days and received by year- end.

Exam 16: Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Indicate which courts decided the case cited below. Also indicate on which pages and in which publications the is reported. U.S. v. Maclin P. Davis, 397 U.S. 301, 25 AFTR 2d 70- 827, 70- 1 USTC & 9289 (1970).

On August 1 of this year, Sharon, a cash- method taxpayer, signs a lease for office space and begins business. The lease is for 3 years. At the time the lease is signed, Sharon pays the $12,600 rent for the entire 36- month lease term. How much can Sharon deduct this year?

A credit is available to encourage employers to provide child care for employees. The employer can either operate its own child care facility for its employees or pay a separate qualified child care facility under contract.

Natasha, age 58, purchases an annuity for $40,000. Natasha will receive $400 per month for the rest of her life. The expected return multiple is 20.0. At age 65, the amount that Natasha may exclude from income is

If personal- use property is converted to trade or business use, the basis for depreciation is the lesser of adjusted basis or FMV on the date of conversion.

Taxpayers have the choice of claiming either deductions for AGI or the standard deduction.

A shareholder sells his S corporation stock and realizes a $500,000 gain. The stock had been held five years. Which of the following statements most completely describes the character of the gain?

Teri pays the following interest expenses during the year: What is the amount of interest expense that can be deducted as an itemized deduction?

On July 1, Alexandra contributes business equipment (which she had purchased two years ago) having a $45,000 FMV and a $40,000 adjusted basis to the AX Partnership in exchange for a 25% interest in the capital and profits. The basis of Alexandra's partnership interest is

May an individual deduct a charitable contribution for services rendered to a charitable organization?

Expenditures which do not add to the value or prolong the life of property may be expensed in the year in which they are incurred.

Summer Corporation has the following capital gains and losses during the current year: The tax result to the corporation is

The holding period of like- kind property received in a nontaxable exchange begins on the day of the exchange.